The Chief Executive Officer, CEO, of the Nigerian National Petroleum Company Limited, NNPCL, has said that state-owned refineries in Nigeria have underperformed because attention has been placed on financing and contracting Exploration, Production, and Construction, EPC, companies rather than on running the facilities.
“The reason our refineries have not worked is that we are focused on the first two: EPC and financing. Anybody who wants to do the financing will get value for it,” Ojulari explained at the Nigerian International Energy Summit, NIES.
“The person financing is not financing you for free, right? They are financing you for margins and profitability. The EPC contractors do their work, get paid, and move on. You, as NNPC, are left for the next 20 to 40 years to run those refineries. And we’ve never really focused on that.”
Ojulari highlighted that although Operations and Maintenance, O&M, have been discussed extensively, effective global practices require strong operational excellence teams to ensure resources are efficiently utilized.
“Then again, O&M is another contract. So you end up with financing EPC, O&M, all of them taking money from the system without any skin in the game,” he said.
“There’s no way you can sustain any business like that. It’s very clear. The system was designed for taking, not to put anything in.”
He noted that the current NNPCL leadership is concentrating on the operational aspects that have historically been neglected.
Drawing from his experience in the oil industry, Ojulari emphasized the importance of appointing operational assurance personnel from the start of projects to ensure they are operable once completed.
“For those of us who spend years building big, multi-billion dollar facilities for the IOCs, we know these principles. The day you start a project, you appoint an ‘operational assurance person’, who will be part of that project from the get-go and ensure that whatever you deliver can be operated,” he said.
Ojulari cited his time at Shell, where he participated in commissioning Qatargas plants and auditing operational readiness before construction was fully completed.
He stressed that proper planning and investment in operational capability, training, and resources are crucial, particularly given that mega-projects often take years to construct but run for decades.
Ojulari added that in the past, NNPCL had not addressed these critical issues adequately.
He also mentioned that NNPCL is exploring a potential partnership with a Chinese firm for one of the state-owned refineries, signaling a move to improve operational performance.
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